Judgment

[Please note that this case has not been edited in accordance with the current Singapore Law Reports house style.]

LP Thean JA (delivering the grounds of judgment of the court):

 1     These were two appeals from the decision of the High Court in which both the claim of the plaintiffs for damages for breach of contract and the counterclaim of the defendantsalso for damages for breach of contract were dismissed. The first appeal, CA 52/94, was initiated by the plaintiffs and the second appeal, CA 53/94 by the defendants. We allowed the plaintiffs’ appeal and gave judgment to them in the sum of $50,000 with interest at 6% pa from the date of the writ and also with costs, and dismissed the defendants’ appeal with costs. We now give our reasons.

The facts

2    The material facts that gave rise to the appeals were these. The defendants were building contractors, and were engaged by the Port of Singapore Authority (PSA) to build a service complex at Brani Terminal, Pulau Brani, in July 1990. The plaintiffs were suppliers of ready-mixed concrete. By an agreement in writing dated 27 September 1990 (the contract), the plaintiffs agreed to supply and deliver to the defendants a quantity of ready-mixed concrete over a specified period. Several amendments to the terms of the contract were subsequently made and agreed to by the parties. The final terms, in so far as material, were as follows:

cl 4:    Total quantity of concrete 16,000m3 with an allowance of ±1000m3.

cl 5:    Duration of supply September 1990 till December 1991.

cl 11:   Terms of payment 45 days prompt from date of invoice.

cl 12:   The supplier reserve the right of not supplying in the event payment was not received.

cl 13:   The contractor is required to provide casting schedule for the whole project and daily orders exceeding 50m3. 24 hours advance notice must be given. In the event that the supplier fails to supply due notice having given [sic] the contractor shall have the right to source for its concrete requirement from alternative supplier and any costs difference shall be recovered from the supplier.

cl 14:   The contractor shall obtain approval from PSA for the concrete supply from the supplier’s concrete batching plant at Pulau Brani.

3    In August 1990, a concrete batching plant was set up by the plaintiffs on Pulau Brani for the purpose of supplying concrete to another building contractor, Hyundai-Chuan Joo JV. The latter was the main contractor of the PSA Brani Terminal Development Project. The plaintiffs planned to supply concrete to the defendants’ project from this plant, but this was subject to the PSA’s approval, as provided under cl 14 of the agreement. It was not until December 1990 that the PSA gave its approval and this was only confirmed in writing on 9 February 1991. During the period before the final PSA approval was given, the plaintiffs supplied concrete to the defendants based on ad hoc approvals by the PSA of the defendants’ orders for concrete. These orders were given to the plaintiffs by way of memoranda from the defendants. However, even after the final approval was given by the PSA, the defendants’ orders continued to be given by means of such memoranda. The defendants had not, as agreed under cl 13, furnished to the plaintiffs a casting schedule for the whole project.

4      Between January and April 1991, the defendants complained of several instances of short and irregular supplies and even non-delivery of concrete. The plaintiffs maintained that these complaints were unjustified or were related to minor incidents. Nevertheless, until 11 May 1991, the defendants continued to place orders of concrete with the plaintiffs.

5      On 6 May 1991, the defendants sent a memorandum for an order of a total of 70m3 of concrete but without stating the time of delivery. This was received by the plaintiffs at its site office at 1.25pm. At 2.45pm, a memorandum was delivered to the plaintiffs requesting for delivery of 20m3 of concrete at 2.40pm on the same day. Later, the defendants faxed to the plaintiffs the same memorandum for the order of 20m3 of concrete, and another memorandum for two separate orders of 30m3 and 15m3 for delivery at 1pm and 4pm on 7 May 1991 was also faxed. No supply of ready-mixed concrete was delivered in fulfilment of any of the orders. In a letter dated 7 May 1991, the defendants wrote to the plaintiffs as follows:

On 6 May 1991, we have requested for 20m3 of Gr30 concrete to be delivered at 1440 hours.

On 7 May 1991, we have also placed order for 20, 30, 15m3 of concrete to be delivered at 9am, 1pm and 4pm respectively. Till now, we are still waiting for your concrete supply.

By virtue of our sub-contract agreement, we shall proceed with order from our alternative supplier and the consequential costs incurred shall be borne by you.

6     The alternative supplier to whom the defendants turned for supply of concrete was Rite-mix Pte Ltd (Rite-mix). That company was associated with the defendants; three of the directors and shareholders of Rite-Mix were also the directors of the defendants, and the main shareholders of the defendants had a majority interest in Rite-mix. Rite-Mix shared the same office address as the defendants. It was not disputed that the defendants had entered into an agreement with Rite-mix on 18 April 1991 for the supply of a minimum quantity of 8,000m3 of ready-mixed concrete. This apparently was the remaining quantity estimated to be required by the defendants to complete their construction work.

7    By their letter dated 9 May 1991, the plaintiffs responded to the defendants’ complaint giving their reasons why the orders on 6 May 1991 were not met. They claimed that the instruction to batch the concrete only came at 12.10pm on 7 May 1991 and by then, the plaintiffs’ production schedule had been allocated to others. It was not in dispute that further orders were placed by the defendants on 8, 9 and 10 May 1991 and were supplied. However, from 11 May 1991, no further orders were placed with the plaintiffs by the defendants. Instead, the defendants had since then been obtaining their requirements of concrete from Rite-mix. The defendants did not refute the plaintiffs’ reasons for non-delivery of the orders of 6 May 1991 until 20 May 1991. In their letter of that day they concluded in the following terms:

We have no other alternative but to purchase concrete from other sources and all differential costs will be borne by you.

8  The plaintiffs replied by their letter dated 30 May 1991. They again gave their reasons for failing to deliver the concrete and further stated the following:

Furthermore, please note that you are in breach of cl 12 of our agreement for failing to pay the following due invoices:

Date                       Invoice                   No Amount

28.2.1991                 0019                       $481.50

31.3.1991                 0016                    $135,433.25

31.3.1991                S0032                      $523.50

Total                                                     $136,438.25

9      Please let us have a proper casting schedule and arrange to make payment of the outstanding invoices within three days hereof, failing which we will treat our agreement as having been terminated by your breaches, and take necessary action as we deem fit.

10     In response, the defendants wrote on 6 June 1991 and the letter, in so far as material, said:

Since you are unable to fulfil your contractual obligation in supplying us the readymixed concrete to our Brani Terminal Project diligently, we are compelled to source our concrete requirement from alternative supplier in accordance with relevant clause of the sub-contract agreement.

All costs difference shall be recovered from you.

11     However, prior to receipt of this letter, the plaintiffs wrote to the defendants on 7 June 1991 in the following terms:

We refer to your letter dated 30 May 1991 and regret the lack of response from you. As you have failed to give us a proper advance casting schedule and have failed to make payment of the outstanding invoices, you have repudiated our agreement with you. Your repudiation is accepted but we reserve the right to claim all outstanding sums from you as well as damages for breach of contract. Kindly arrange to make payment of the sum of $278,969 and confirm your agreement to pay us damages within five days hereof. A breakdown of the sum of $278,969.00 is as follows:

Date                       Invoice                   No Amount($)

28.02.91                   0015                           481.50

31.03.91                   0016                        135,433.25

31.03.91                   S0032                         523.50

30.04.91                   0017                        116,565.75

30.04.91                   S0047                         420.00

31.05.91                   0018                        25,545.00

Total                                                         278,969.00

12     The defendants did not make any payment of the sum demanded. On 11 July 1991, the plaintiffs commenced proceedings for the recovery of the sum of $278,969 and damages for breach of contract. The defendants counterclaimed against the plaintiffs also for damages for breach of contract on the part of the plaintiffs which they averred amounted to $253,598.08 being the additional cost which they had incurred in procuring supplies from Rite-mix.

Decision of the High Court

13      Prior to the action being heard, the plaintiffs had obtained summary judgment against the defendants in the sum of $253,424 and leave was given to the defendants to defend the balance sum of $25,545. A stay of execution was ordered on the judgment pending hearing of the counterclaim. The plaintiffs subsequently obtained leave to amend their statement of claim and deleted the claim for the balance sum of $25,545 with liberty to file a fresh action for this sum. A fresh action was later filed and the plaintiffs obtained summary judgment on this balance sum. The hearing before the High Court proceeded on the plaintiffs’ claim for damages for breach of contract, namely, the loss of profits in respect of 9,940.6m3 of concrete purchased by the defendants from Rite-mix and on the defendants’ counterclaim for the additional costs they had incurred.

14       The learned trial judge found the following facts, namely: (i) the construction of the Rite-mix batching plant near the defendants’ site, (ii) the defendants’ insistence on seeking alternative supplies, and (iii) the fact that no further orders had been placed with the plaintiffs since 11 May 1991. He held that these facts clearly evinced an intention on the part of the defendants to put an end to the contract for the remaining concrete requirements. However, the learned judge held that the plaintiffs did not accept ‘this renunciation or repudiation’ but by their letter of 30 May 1991 affirmed the contract. He also found that subsequently the plaintiffs wrongly repudiated the agreement by their letters of 30 May 1991 and 7 June 1991 and accordingly dismissed their claim. Although the plaintiffs were found to be in wrongful repudiation, the learned trial judge held that they were not liable in damages on the ground that the losses allegedly suffered by the defendants, if any, did not result from the plaintiffs’ wrongful repudiation of the contract. [See [1994] 2 SLR 552.]

Civil Appeal No 52 of 1994

15     The main issue before us in the plaintiffs’ appeal was whether the defendants had repudiated the contract. If they had, the plaintiffs by their letter of 7 June 1991 had accepted the repudiation, and the contract was in consequence terminated. In our judgment, the evidence before us clearly supported the conclusion that by that date the defendants had clearly evinced an intention not to be bound by the contract. First, long before that date, on 18 April 1991, they entered into an agreement with Rite-mix for the supply of the minimum quantity of 8,000m3 of ready-mixed concrete, which was the remaining quantity estimated to be required by the defendants to complete their works. Very soon thereafter, they proceeded to engineer a situation — so it appeared from the evidence — in which the plaintiffs were unable to supply the concrete ordered and thus provided them a justification for looking for alternative supply. This was borne out by the very strange and unusual ways they placed the orders for the ready-mixed concrete on 6 and 7 May 1991. The first memorandum, which the plaintiffs said that they received at 1.25pm, was an order for a total of 70m3 of concrete for delivery on 6 May 1991, but no delivery time was stated. Subsequently, an order for 20m3 of concrete for delivery at 2.40pm was faxed to the plaintiffs and this was received by the plaintiffs at 2.45pm. Later, the same memorandum for delivery of 20m3 of concrete was faxed to the plaintiffs at 5.40pm, with the following note ‘To carry forward to 7 May 1991, supply not available.’ At 5.48pm, this same memorandum was again faxed to the plaintiffs but with the further note that delivery was postponed to the following day at 9am instead. At the same time, two other orders for 30m3 and 15m3 for delivery on 7 May 1991 at 1pm and 4pm respectively, were also faxed to the plaintiffs. Predictably, no supply was delivered by the plaintiffs in fulfilment of these orders. The defendants by their letter of 7 May 1991 sought the consequential costs incurred by them for the non-delivery.

16     Secondly, after 11 May 1991, no further order was placed by the defendants with the plaintiffs for the supply of ready-mixed concrete; they had been taking their supplies from Rite-mix. Then came their letter of 20 May 1991. By that letter, they disputed certain facts relating to the orders alleged by the plaintiffs in their letter of 9 May 1991, and concluded thus:

We have no other alternative but to purchase concrete from other sources and all differential costs will be borne by you.

17     Finally, on 30 May 1991 the plaintiffs demanded payment of the sum of $136,438.25, and the defendants refused or failed to make any payment. By then the defendants were late by 15 days in making payment of the bulk of the sum  claimed. The period of three days for payment given by the plaintiffs in their letter of 30 May was no doubt unduly short; but the defendants had never made any payment thereafter. As appeared from the evidence, the defendants deliberately refused to make any payment for the concrete supplied to them. On 6 June 1991 they wrote to the plaintiffs alleging failure by the plaintiffs to supply ready-mixed concrete diligently and stating that they (the defendants) were compelled to take supplies from an alternative source. There was no basis for their allegation that the plaintiffs had failed to supply the concrete, as they had not placed any order with the plaintiffs for nearly a month, ie since 11 May 1991. The party in breach at the time was the defendants, and having regard to all these facts they clearly had evinced an intention not to perform the contract.

18    We now turn to the plaintiffs’ letter dated 7 June 1991, alleging failure by the defendants (i) to provide a proper advance casting schedule and (ii) to make payment of the outstanding invoices. On the question of failure to provide a casting schedule, the defendants conceded that they had not provided a casting schedule. But that was not in issue. As the learned trial judge found and we agree with him, the plaintiffs were able to supply concrete for some nine months without such a casting schedule, and in our judgment, the failure to provide this schedule did not amount to a repudiation of the contract.

19       As to the question of payment of the sum due, the defendants were then late by 22 days in payment of the bulk of the sum due. Mere failure or delay in making payment per se would not amount to a repudiation. But in this case, by that date, ie 7 June 1991, the defendants were not merely stalling for time to make payment to the plaintiffs, they did not intend to pay the plaintiffs at all and perform the contract. They had not placed any order for supply of concrete with the plaintiffs since 11 May 1991 and had been obtaining their supplies from Rite-Mix. They were clearly in breach of contract, and by their conduct they had by then repudiated the contract, and the plaintiffs accepted the repudiation by the letter of 7 June 1991. In our judgment, the plaintiffs did not repudiate the contract either by their letter of 30 May or that of 7 June 1991.

20    We now turn to the quantum of damages. In the court below, the plaintiffs computed their losses on the following basis:

Sale price of balance of concrete of 9,940.6m3 based

on the appellants’ contract with the respondents            $1,031,636.25

Less:

(i)   Adjustment for fluctuation in the

        priceof aggregates                 $ 33,809.90

(ii)   Costs of materials                   $828,731.00

(iii)  Costs of production

(a)   trucking charges           $ 69,584.20

(b)   fuel for plant, etc           $ 2,783.37

(c)   water                            $ 2,056.41

(d)   maintenance                  $ 7,057.83

(e)   labour costs                  $ 8,091.16

                                                    $952,113.87

                                                    $ 79,522.38

21       The learned trial judge accepted the above computation but assessed the net quantum in the sum of $50,000. This amount was arrived in the following manner.First, he allowed 1% for wastage amounting to $8,287.31, and also made an allowance for transport costs for unloading the sand and aggregates from the barge to the jetty and from there to the batching plant. He assessed such costs at $1 per ton for the 7,622.44 tons of sand and 10,403.09 tons of aggregates that would have been used for batching the balance of concrete. He then rounded off the net amount to $50,000. In our judgment, he was not in error in making these deductions, and we were not disposed to disturb his assessment.

Civil Appeal No 53 of 1994

22       We now come to the defendants’ appeal with respect to their counterclaim for consequential costs borne by them amounting to $253,598.08. As we were of the opinion that the defendants themselves were in breach of contract, it followed that the counterclaim against the plaintiffs must fail. Accordingly, we dismissed the defendants’ appeal.

Plaintiffs’ appeal allowed; defendants’ appeal dismissed.

Reported by Chou Sean Yu